tv Cable Executives Testify on Customer Service and Billing Practices CSPAN June 23, 2016 8:00pm-10:05pm EDT
>> and watch the democratic national convention starting july 25th. with live coverage from philadelphia. >> let's go forward, let's win the nomination and in july let's return as a unified party. >> and then we take our fight for social economic, racial, and environmental justice to philadelphia, pennsylvania. >> every minute of the republican and democratic parties national conventions on cspan, cspan radio and cspan.org. tonight on cspan 3, cable industry executives testify on capitol hill about their customer service and billing policies. then the release of a report on the fiscal health of the social security and medicare trust funds. and later, a senate confirmation hearing for the nominee to head the u.s. military's africa command.
>> we're here today to discuss a topic that affects just about every american family. and often frustrates us as american families and that is cable or satellite tv service. we have taken an investigation of the cable and television satellite television industry as many of you know, senator mccaskill has been there in this. issue for many years. she'll talk about that. we have a keen interest in making sure cable and satellite companies do the right thing by their subscribers. the subcommittee reviewed
literally thousands of documents and interviewed countless witnesses to learn more about the consumer practices of the five largest paid tv providers. this includes comcast, charter, time warner cable, dish network and directv. director -- together the companies serve more than half of all american households and nearly three quarters of those who pay for television programming. today's hearing will focus on the companies' billing and consumer service practices. our report outlines troubling findings about the cable companies that failed to provide refunds to customers who they know they've over charged. including thousands people in ohio. i'll talk about those findings in a moment. the second is report issued by senator mccaskill and a number of interest of consumers, how paid tv companies disclose prices sh what the fees are for and how they teach employees to interact with and retain customers. and without objection, these reports will be made part of the record.
during the course of the subcommittee's investigation, we discovered something about refunds that frankly i found hard to believe. as anyone with a cable or satellite subscription knows, when your bill arrives every month it has a long list of charges on it. i have a bill in front of me. it is a pretty complicated bill, a base charge for the tv package, maybe $10 for hbo, equipment fees, and surcharges for the set top boxes that you rent. given how many millions of people get television service from these companies, it's inevitable that from time to time a customer will wind up getting charged for something by mistake. that happens. same thing by the way happens in the grocery store checkout line sometimes. it's happened to me. mistakes happen. we understand that. what matters in life is how you own up to your mistakes and make things right. but we discovered is that some cable and satellite companies are better than that at doing that than others. all of the companies before us have ways of identifying overcharges to customers and
preventing them from happening in the first place. but what happens when they find out they've been overcharging someone for equipment that customer doesn't actually have? the first thing they do, of course, is take it off the customer's bill going forward. all the companies before us know how to do that. but not all of them bother to go back and figure out when the overcharge started cable and charter communications who have just recently merged with each other made no effort to trace equipment overcharges they identified and provide refunds to their customers. instead, the practice has been to just pocket the past overcharges. to understand the scale of this problem, we asked for specific numbers about overcharges in ohio. here's what we found. during the first five months of 2016 this year, time warner cable overbilled up to 11,000 customers in ohio and those overcharges totaled over $100,000.
they estimate that throughout last year alone it overbilled 40,000 ohio customers with overcharges of more than $430,000. and rather than correct the mistake by refunding the overcharges, the company just kept the money. in my view, that's a ripoff of ohio consumers. i'll be asking the company today how they're going to fix it. specifically, when time warner cable discovered the overcharges, it only dealt with the problem prospectively. they took charges off the bills going forward but did not provide any backward looking refunds and didn't provide notice to customers so they could investigate the problem themselves. they just kept the money. based on data provided to the subcommittee, time warner cable will overbill the customers nationwide an estimated $2 million for equipment charges in 2016 even after discovering the billing errors. they'll fail to do the work required to provide a full refund. we'll talk about that. they have recently been acquired by charter communications so i hope they work to fix the
problems. charter has had problems of its own. until august of 2015, last summer, the company didn't run any systematic audits to reconcile the billing records with equipment records. that means over charges occurred. even though it's identified overcharges, removed erroneous charges from future bills, since august, 2015, until today, charter has not provided any refunds or notice of the problem to customers, just like time warner cable. it doesn't have to be this way. our investigation revealed that comcast, directv and dish had better practices. comcast and directv provide refunds or credits to customer who's have been overcharged by the billing systems and dish's
billing system is designed and successful in preventing any of these types of overcharges from occurring in the first place. so fees ability is not a good excuse whether it comes to refunding customers when they've been overcharged. we have good news to report today. as a result of our investigation, charter and time warner cable have taken steps to improve their practices. time warner performs monthly audit to find overcharges. going forward, the company will provide a one month credit to all customers for each piece of overbilled equipment or service and will provide notice to overbook billed customers so they can determine whether to request a credit or refund. that's a good start. but it doesn't make all customers whole. time warner cable is not yet committed to anything for the 40,000 ohio customers, for instance, who were overcharged last year. and we'll get into that discussion later today. charter has announced they will provide a one year credit to all affected consumers. that, of course, goes further to make customers whole.
but it would be better to simply insure that customers receive the full refunds that they're owed. the report shows americans are often unhappy with the cable and satellite service, questionable customer service techniques and confusion surrounding billing practices led consumers to feel mistreated. i support a effort to get to bottom of the issues and i feel the best solution to the problem of our poor customer service is more competition. if you don't like your television service provider, you should be able to provide a different provider, suit your needs and preferences. and senator mccaskill and i are going to look into providing more choices for the consumers. i want to thank the senator for her work on this. she has been a stalwart friends
of consumers as i said earlier. she and her staff have worked with us in a professional and productive way to make today possible. i'd like to turn to senator mccaskill for opening statement. >> thank you. i want to thank you for allowing me to pursue along with you and your staff this investigation. i think we can feel great about the fact that just this investigation and hearing have caused good things to happen for consumers as it relates to paid tv. as you indicated, we've had a change just from the investigation both charter and time warner agreed to issue credits for thousands of customers who were overbilled and comcast has provided additional guidance to the retention representative allowing customers to cancel without an argument. so we can already claim some small victory as a result of these investigations. and this hearing today. and i think this is an important area for us to continue to look at.
it is amazing to me when we began asking for input, the volume and passion of input we got from people about how they feel like they are mistreated by their paid tv provider. and this morning for the first time, our nation's largest cable and satellite companies are testifying together before us about their service, customer service and billing practices. they are here because this subcommittee has broad jurisdiction to investigate issues when affect the american people. i tried to have this hearing as the chairman of the consumer protection subcommittee and i got no cooperation from any of these companies in connection with that hearing in the later months of 2015. i made a determination then that i wasn't going to give up. we were going to stay on us. and i'm greateful for your agreement to allow this
investigation to go forward. the five companies here today provide video services to more than half of all american households. they enable more than 71 million subscribers in their families to receive news, entertainment and other programming. and while we may love watching our shows, we don't love our cable and satellite bills. and we hate dealing with the cable and satellite companies. although the companies made gains in the past year, paid tv providers are the most disliked industries in america. this year a survey of consumers found that more than 20% of the people who interacted with tv providers reported having a bad experience during the previous six months. the highest level of any industry. so how i did begin down this road? well, it was with a personal experience. i called one of my providers and asked questions about my bill. and in the process of that conversation, i learned -- this is over two years ago -- that there was a $10 charge on my bill for a certain service that now was included in the basic
package. and i said, well, so i'm paying $10 and i don't have to? and the person on the other end of the line kind of said, yeah. you're paying $10 and you don't have to pay it. i said well were you going to tell me this? and they said, well, no, you have to call in and ask. that's exactly the kind of hide the ball that infuriates people. so if i hadn't called in and asked, that $10 could still be on my bill today. based on the billing practices of the company's represented at this hearing. so we have done a huge investigation and i have reviewed a lot of material and my staff has and i've consumed a lot of information about this. so i decided two days ago i'd take another spin. now i know a lot. now i know the difference between a customer service representative and a retention specialist. now i know what to say and how to say it. so two days ago i called one of my providers.
and i'm -- on my website people can listen to the recording of this conversation. and i am going to, in fairness, because i don't think this is necessarily one company versus another. i am not going to talk about which company it is. and nor will the recording. and i'm not going to read here nor on the recording will i give my personal information i was asked to give when i called. but here's how the conversation went. the first part of it until they got me to that magic retention specialist. hello and thank you so much for calling. can i have your name, please? my name is claire mccaskill. can you spell that for me, please. i proceeded to spell it. i proceeded to give the representative my service address. i proceeded to give her the name on the account and say that was my husband's name. and she asked what my relationship was to the account holder. i said it was my husband. and then the woman says, okay. how can i help today? i said i would like to have you
remove -- there's a fee on here. i'm not sure how it got on here for a protection plan. i don't recall buying that or being asked about it and i would like to have it removed. now she wants to get my information about my account and my active credit card to make sure i am the person that i say i am so she goes through what credit card i have on file. then she says, all right. so you said you're seeing a charge for a protection plan and you'd like to know what it's for. i said, no, i'd like to take it off. oh, you'd like to take it off? yes. all right. but you are aware that protection plan covers equipment upgrade every two years and if you lose your equipment then we'll replace it for you at no charge. i said well you are saying that equipment i have in my house now is mine or it is yours? well, it's ours. but if there are any issues say, for example, spills or the cables get cut then we replace
it for you. i said well but let's just say if it's your equipment and something goes wrong with it, don't you have to fix it anyway if i get the service i'm paying for? since you own the equipment? well, we -- let's say if the remote fails or stops working, the protection plan on the account will fix that free of cost. i said well what would that cost if the remote quit working? it's your remote that you own. what would it cost to get fixed if i didn't have the equipment plan. that is done in my equipment department. i'd like to connect through for more information. i said, no. i knew better. no. i don't want to do. that if you do that, i've got to wait and tell the story all over again. i just want to find out why i can not get you to take off the $7.99 for the protection plan. i'm not saying i'm not able to take it off. i'm just letting you know the benefits you get with the protection plan. i understand. i think i understand. i think, frankly, it's a rip off because you own all the equipment.
i think you have to fix the equipment since you own the equipment and if you can't fix the equipment and i couldn't get the service and then i wouldn't pay for the service and i would go to another provider. so what i'm asking is will you just disconnect it. i don't want to pay $7.99. i don't even know how it got on my bill. i think you just started putting it on my bill and i wasn't paying close enough attention. all right. she says. but if i actually have the protection plantain off, there will be a $10 disconnection fee. it would be a $10 disconnection fee for me to quit paying the $7.99 every month? that's correct. and it's a one time disconnection fee? yes, it's one time. and what do i pay you for? paying for, she says? yeah, what am i paying for, for you to just quit charging me for the service, i have to pay you $10? well, no, basically -- i think -- and then i say i think what we need to do, i think now it's time for me to switch carriers. if you're going to charge me $10
for charging me something i don't want anymore, i think it's time to switch carriers. all right. well, that's just the policy. so once i take off the $10 -- take off the protection plan charge it will be automatically on your account. okay. so what you're saying is if i want to cancel $7.99 that you've been getting every month for the protection plan you're going do charge me $10 to do. that you have no choice? i have no choice. you can't waive that? it is policy, that's correct. do you have discretion to give me a one time credit of $10 to do away with that? i'm really sorry. i don't really think you want to lose me as a customer, do you, over $10? well, we do value your business but it's a policy here. once i take it off, there will be the $10 charge. and there is nothing can you do about that? you do not have the option to waive and she says, no, i do not. so then finally, i said well who -- could waive the $10? she says, well, i would have to give you to the retention specialist.
and i'm not really sure how it works in that department. so then she switched me over to the retention specialist. now this is typical. it's typical. and more importantly, when she switched me to the retention specialist, i knew what to say. i knew to quit -- keep threatening i was leaving, keep threatening i was leaving, not give up. keep threatening i was leaving. and by the way, it was a long call. even when we edited to take out the things that are not personal, it was longer than 15 minutes and at the end of the call i managed to get the $7.99 off. i was told by specialist i never should have been charged the $10 and i got so mad and escalated as this called in business that the retention specialist ended up giving me $10 off a month for 12 months. they were looking at at screen that told them all information
about me including the fact i'm a pretty good customer. my bill is pretty high. so i say this because i think this is what the industry maybe doesn't completely understand in terms of the anger. we found that customers being charged a host of fees not included in advertising pricing, some of which are for programming that used to be included in a customer's video package. we also found that just as many customers have long believed some of these fees like hd and dvr service fees aren't really a true reflection of the cost of the company of the service but rather are based on the revenue goals of the company. and the price that customer is willing to stomach. in fact, some of the fees are charged to old customers while new customers get the same services free of charge. existing customers may not be informed of this and when they finally figure it out, they have to call and complain to get it taken off. we found that customers who call for help on their accounts face agents whose job it is not to just solve the customer's problems but in fact to sell them additional services.
at one cable company, even when the customer called in to ask about why their bill was going up, the company told them, "the price adjustment brings with it an opportunity to upsell customers and the agents are compensated in part on their ability to sell you more." then if the customer decides they want to cancel the service, they have to jump through more hoops. although all the companies here today allow people to sign up for service, or upgrade their service online, none of them provide customers option to cancel service online without speaking to a company representative. and if they call, they have to speak to sales people like the one i spoke to this week who was trained to prevent the customers from cancelling and hopefully selling you more product. even when customers don't say they don't want to have this discussion, the agents are expected to ask questions about why the customer is cancelling. customers trying to save money by lowering their level of
service are often routed to the same agents which and should be prepared to negotiate aggressively. we found evidence that they train the agents to question customers decision to drop channels and make offers in a top down fashion so the customer must repeatedly push and push and push to get the best deal. finally, we found that two of the companies have failed to provide notice -- provide their customers with notice that they overcharged in the past. as the chairman pointed out, thousands of nem our states have been impacted. the time from missouri, time warner overbilled 4,232 customers last year for a total of $44,152. and charter estimates that it annually overcharged approximately 5,897 missouri customers a total of $494,000 each year. i want to acknowledge the cooperation we received from all the companies represented before us to day.
as well as acknowledge the commitments they have made during the process of this investigation to improve customer service. unfortunately, our investigation suggests that there is a long way to go. and as did my conversation with one of my providers just two days ago. i thank the witnesses for their testimony and look forward to the opportunity to ask you questions. >> thank you. we'll go to our panel of witnesses. we appreciate you being with us. we have senior vice president of customer service for comcast he oversees all call center operations and other customer service channels. we have with us john kide. he is the former ceo of residential services for time warner cable where he was in charge of customer service, service delivery, technical support, marketing and sales. we have kathleen mayo, customer vice president at charter communications which is responsible for charter's customer care organization.
we have the senior vice president of product management for at&t entertainment group, he is responsible for product strategy and entertainment for direct tv. and we have kathleen snyder with white house is senior vice president of operations for dish network where she oversees customer service for all dish and sling tv subscribers nationwide and manages dish's call centers and process improvement operations. again, appreciate you all being with us this morning. we look forward to your testimony. it's the custom of the subcommittee to swear in the witnesses so at this time i ask you all to please stand and raise your right hand. do you all swear that testimony you're about to give before the subcommittee was the truth, the whole truth and nothing but the truth, so help you god? thank you. let the record reflect that each witness answered in the affirmative. all of your written statements will be made part of the record in their entirety. i ask you to keep your oral testimony to five minutes today and we would like to hear from you first.
>> thank you. chairman, ranking member and members of the subcommittee, i'm the senior vice president at comcast cable. thank you for the opportunity to be here today. i also want to thank your staff for the courtesies extended to us throughout this review. i understand why we are here. comcast and the industry as a whole have not always made customer service the priority it should have been. our ability to address customers' needs in a timely fashion has been an issue. our bill haven't always been simple to read and the range of choices and prices we've offered haven't only provided customers with the options they want. i'm sorry about that history. at comcast, we committed to customer that's we would change it. and we're taking steps to do just that. i want to reaffirm that commitment to you all today and to outline the action that's we're taking.
when i started this job, i made it a decision to spend time on the phones and in the stores with the employees and our customers. that is the front line. that is the place where customer reviews about comcast are shaped. when you contact us to get new service, you want to speak with someone who listens to what you say and who understands all of our product options. you want to know the full price and you have time to change your mind if your order isn't exactly what you need. when you get bills from us, you want them to be easy to read and you don't want to see surprises or changes that you do not understand. when you call with a question or problem or to tell us you made a mistake, you're polite and respond to service. you want the issue resolved the first time if at all possible. if you move out of our service area or decide to have service other than ours, you want to be able to do so without delays and without hassle. we have listened to what you have said.
yesterday i met with some of our front line employees and a local store here in the d.c. area. and i took some calls directly from customers and was heartened by what i experienced. i submitted a longer statement for the record and i won't repeat much of it here. but i do want to tell you a few of the key components of our efforts to improve our customer service and to provide a better customer experience. first, we are investing in additional training and new technology for all of our employees. we are committed to ensuring that when our customers speak to comcast representatives they're speaking to representatives that received comprehensive and consistent training. on the technology side, we laid out a new cloud based platform that gives customer service representatives a better holistic view of the customer's account history so that customers don't need to keep repeating the same information when talking to somebody new. second, we are reassessing policies and fees and
simplifying our bills to improve the overall customer experience. for example, we have eliminated change of service and other fees. we now allow customers to return equipment free of charge through our partnership with ups. we offer all customers a 30-day money-back guarantee. and in response to the subcommittee's concerns, we reaffirmed in a policy statement sent to all retention specialist that's we expect them to promptly facilitate a disconnect for a customer who is not interested in answering questions. third, we're giving all customers better access to products and services that work best for them. we listened to our customers and are developing new products that better suit their needs. for example, we recently developed the cutting edge x-1 platform which has completely enhanced and revamped our customers' entertainment experience. we expanded our free on demand programming to offer our customer more choices than ever before.
and finally, we are measuring all of our employees on customer satisfaction. our compensation plan for front line employees is now tied directly to the customer experience. in fact, the compensation for all company employees including our company's top executives depends in part on these customer service scores as well. comcast will spend an incrementle half million dollars a lone this year on improving the customer experience. as part of that initiative, we are creating more than 5500 new customer service jobs over the next three years including positions that we've already filled at a new call senter in albuquerque, new mexico, an tucson, arizona. having spent six years in the army myself, i'm proud of the fact that we're looking to fill many of the positions with our nation's veterans and their families. we believe these and other steps we've taken to improve our customer experience are making a real difference. thank you again for the opportunity to testify and i'm happy to answer any questions
that you may have. >> mr. kibe. >> chairman portman, ranking member mccaskill and other members of the subcommittee, good morning. my name is john kibe and i'm here to testify on behalf of time warner cable. thank you for the opportunity to as you know, time warner cable merged with charter communications to form a new company. my role at time warner cable ended when the parties completed the transactions. i am no longer employed by time warner cable or charter as such i'm testifying to day as a former time warner cable executive but also as a private citizen. my most recent position at time warner cable was executive vice president and chief operating officer for residential services. in this role, i lived the customer care marketing and sales operations for the company's residential service.
to the extent that questions arise relate together future of time warner cable and charter, i will defer to the witness kathleen mayo. we serve 15 million customers receiving video, internet or telephone services from maine to hawaii. we employ thousands of customer service representatives who we train first and foremost to serve our customers. let me begin by acknowledging that we're well aware of the issues that we've discussed by the subcommittee today. those of who you live in a time warner cable area have probably seen our most recent ad campaign in which we acknowledge and highlight prior service challenges before explaining the steps we're taking as a company to address the short comings. that campaign is a culmination of efforts made during my tenure at time warner cable to improve our customer service performance in order to provide the best customer experience possible beginning in 2013 on an internal strategy we called winning on service, we embarked on an aggressive plan to improve the
customer service and took several steps towards that goal. we invested heavily in the network. we made several technology augmentations for broadband and video and initiated an ambitious plan to reshape our customer service performance by investing in our greatest and most important asset, our employees. we sought to make service the differentiator and become the best service provider within the telecom space and within any industry. our goal is to keep customers and we accomplished that goal by keeping them happy. to do this we train our customer service representatives to provide excellent care to our customers upon hiring our representatives receive 11 weeks of hands on training as well as weekly on going training and coaching sessions with our supervisors. these coaching sessions allow a representative to learn from the actual calls they handle. our focus on customer service has made a difference as more than four in five customers report they're satisfied with their interaction with time warner cable and they are increasingly satisfied. we made great strides in. addressing customer issues more quickly and efficiently.
we've done this by improving our level to enhance training and better staffing and improving our product and service performance and introducing call backs which allow customers to call back time warner cable at times that best work for them. as a result of these efforts, our total call volume is down over the past three years the number of calls fielded by our customer service representatives decreased by 12 million which is testament to better and more efficient customer service. one measure of the improved customer service is one touch resolution. the percentage of calls that are managed by a single agent. we achieve one touch resolution nearly 94% of the calls we handle. in addition, time warner cable began offering tree one hour service and installed windows and then the first quarter our technians were on time for the
appointments 99% of the time. we reduced a $1.6 million the number of time warner -- the number of times that a technician needed to visit a customer's home to handle a repair. are we there yet? no. making such changes at a company our size is no small feat and the desired changes can not all happen at once. still the evidence suggests that our efforts are starting to pay off. in the latest consumer american satisfaction report, time warner cable is the fourth best internet provider that is up from the 13th position two years previously. we do not have enough time to fully execute our plan, i'm proud of the early results and just as i'm most proud of our technicians and customer service agents who are together pursuing a single mission of winning service. i'm confident that charter holds the same tenants about prioritizing customer service and will continue to improve the customer service experience. i look forward to answering any questions you have today about time warner cable and i'd like to thank you for having me here today. >> thank you. miss mayo? >> thank you, chairman portman, member mccaskill.
and members of the subcommittee. i appreciate the opportunity to testify here today. i'm kathleen mayo and charter's executive vice president of customer operations. i'm here to talk about the significant progress we've made improving the customer experience at charter since the company's 2009 bankruptcy and especially since the change of leadership in 2012. as a result of the history, charter's infrastructure was in serious need of capital investment. the company's financial situation meant they underinvested in repairs which kept the product from performing reliably and they tried to cut costs by outsourcing thousands of customer service jobs overseas. since becoming ceo and brought in a new leadership team we instituted a new playbook for success that included streamlining the video products atting value to the products and
delivering the fastest, minimal broadband speeds all at highly competitive prices with the focus on improving customer service. our efforts over the last two years to improve customer service including insourcing customer and service positions creating thousands of americans jobs. we invested significantly in training our employees to be responsive to the needs of the customer. since 2012, we hired over 7,000 employees, a 40% increase and the majority of those roles are customer positions many of which were brought back from overseas. today nearly 90% of our customer calls are handled on shore and inhouse and 95% of our inhome service visits are performed by charter technicians. we are committed to locating our facilities in the communities we serve most recently opening a
$16 million center of operations in missouri. as part of our transaction with time warner cable, charter expects to hire 20,000 american workers, many of whom will fill customer service jobs that are currently outsourced to call centers in other countries. this approach has given us greater quality assurance with our representatives and our actions with customers. our representatives engage in conversations with our customers to understand their unique needs in order to properly assist them. we do not follow scripts. to improve the customer experience, we also have taken steps to simplify our bill by eliminating common industry fees and we expanded self service capabilities. as a result of these steps and the $7 billion we invested in our network, customer service calls declined 25% since 2013 when our customer dozen need assistance, we've been able to resolve the issue on first call 80% of the time. those high quality customer interactions are growing our customer base. in a very competitive environment, we added more than one million customer relationships since the beginning of 2012. growing our total customer base by 18% despite having no early termination fees to prevent customers from leaving us.
our churn is down. our existing customers are staying with us longer and our customers satisfaction is improved by 12%. we're pleased with our accomplishments to date and believe the results are beginning to show but we also know that there is still much work to do in order to provide our customers with the actual service that they expect and that they deserve. to eliminate accidental overcharges for video equipment, charter instituted checks and balances that create controls in our order entry systems to ensure we get each order right. our recent audited video equipment and billing was 99.4% accurate. out of 11 million boxes, we found 63,000 boxes, less than 1%, were customers were overbilled. 99.4% is a high accuracy rate, it remains unacceptable. no accuracy rate short of 100% is acceptable. as a result, we're reconciling every single account every single day to insure we're accurate. we're in the process of
notifying overcharged customers and we're issuing them a 12-month credit n conclusion, we made significant investments to improve our network, streamlined our products, simplified our pricing and insourced thousands of jobs to strengthen our american workforce and charter continuing to work every day to improve and show our customer that's we're committed to providing a superior customer service. thank you. >> thank you. >> good morning, chairman portman, ranking member mccaskill and members of the subcommittee. my name is rasesh patel. i appreciate the opportunity to speak you to on behalf of at&t and our customer service. the hallmark of our brand is to offer customers the very best entertainment experience through our technology, unique content offerings and good customer service. and we're proud of that heritage but we need to get better. and we're working hard to do so. and to that end, we need to compliment our great product. i think we have a phenomenal product that offers customers, you know, first digital experience, sunday ticket, first
to go to hd. but sometimes that great product isn't complimented with great customer experience and it frustrates our customers. to that end in 2012 i started a group that focused on being champions for the customer inside the organization, reporting directly to the ceo. and our goal was not just customer service. our goal was to relook the entire business through the customer's eyes, to conduct significant amount of analysis on what exactly customers are going through and to be the internal voice of the customer in the organization so that is decisions are being made and as policies are being set, the voice of the customer is represented. to be a champion of the change and see improvements all the way through. we made a lot of progress to that end. but we have a long way to go. and so this is a very personal issue for me.
you know, i went and asked our ceo to really lead this organization and so i'm glad to be here today. our commitment to serving customers and kbgiving them mor value in choices have never been stronger. we recently announced in march plans to launch over the top services that will provide customers flexibility and increase choices in lower cost offerings to customers. it will allow them to enjoy our content distributed over the internet in a much more simple business model and offerings. directv has ranked higher in cable in 16 years in a row but we recognize that we need to raise the bar in this ever evolving competitive landscape with rising content costs. if customers are going to pay more for the service, they can, should, and will expect more. and we believe service is an essential component of our success and we devoted and
continue to devote significant resources towards our goals of delivering a superior customer experience. i've been with the combined at&t and directv company for 15 years in a number of different roles. as you introduced chairman, i'm currently senior vice president of product management. but from 2012 until at&t's 2015 acquisition of direct tv i served as senior vice president of customer experience and in that role i led directv's pro active enterprise wide customer sen trick effort to improve the experience across all customer touchpoints. the initiative began with a comprehensive evaluation of all of our policies and practices. we conducted detailed research on exactly what the customer was going through and we shared much of that resource with the -- research with the subcommittee and we did an analysis on operational data in order to really prioritize our efforts to what was most important to customers. and we've invested hundreds of millions of dollars in that customer experience initiative
which is produced real results for our customers. we eliminated an annual 18 million phone calls to our call centers over the last three years. which demonstrates they're experiencing fewer issues. the way i look at it is that is 300,000 fewer times someone has to take a day off work in order to meet a service technician. we reduced complaints to our complaint resolution center by 44%. and we introduced a new simplified bill that clearly showed customers what the full retail price of their services were with the discount amount was and that was very transparent. every month about communicating when that discount expires. we made it a point on page one of that bill to pro actively identify anything that changed from the previous month so customers don't have to hunt for that information. and directv is also maintains a dedicated team to proactively identify and address billing errors.
and it's a continually learning process. if we find an issue that becomes a part of a continue inquiry we'll look for that problem going forward. and our policy to proactively address billing errors, to notify customer that's we made an error and to reimburse affected customers. and we even do so if that person is no longer a customer us with. we'll go back and credit their account. but we're not done yet. we have plenty of room for improvement and to that regard, at&t and directv will spend more than a billion dollars towards enhancing the customer experience from 2016 to 2017. and while we do take pride in the progress we made over the past three years, we know that customer satisfaction is a never ending journey and we can, should, and need do better. in that regard, i sincerely welcome the committee's input. through this process i have run across a couple things that i myself have discovered that
would drive change in our organization. and we're confident that as a combined committee we will enhance our ability to provide customers with the very best products and services that they deserve. so i thank you for the opportunity to appear here today and i look forward to answering your questions. >> thank you, mr. patel. miss schneider. >> chairman portman and ranking member mccaskill, thank you for letting me speak today. in the 1980s, dish's three founders found that consumers should have an affordable alternative to cable. we launched in 1996 and successful in providing meaningful competition within the paid tv industry. dish is in and out nation's fourth largest paid tv provider with about 14 million subscribers. we have 18,000 employees plus relationships with over 6,000 independent retailers most of which are small businesses providing community, store front
operations for our customers. there are 146 retailers in ohio and 167 in missouri. we are proud that dish is the only provider of local broadcast channels in all 210 u.s. media markets ensuring that even the most rural customers receive the same high quality television as customers in more urban areas. for dish's customer service the issues we'll discuss are complex. here's the simple truth for dish. our success as a business depends on satisfied customers. we have spent the last two decades working to provide a first rate entertainment experience in making our customers happy. happy to customers, understand and see the value of our products and services. understand our bills, receive a seamless installation of reliable products and receive responsive repairs and service changes. at dish, our sales installation and teams are working hand in hand.
we've received outside recognition for these efforts, including an a plus rating from the bbb and a top ranking in several categories including lowest customer complaints. we track the latest customer pain points and adjust our subscriber offerings, we make sure our agents have the necessary tools to match each customer with the best technology for their needs. when a call comes in our policy is to resolve, prevent and promote. resolve the customer's issue. then prevent any future issues and only after that promote the value of dish. we also keep innovating, and coming up with the best technology to meet customer demands of tv anywhere anytime. that's what's behind our award winning set top box the hopper and sling tv our live internet streaming service.
we're in a highly competitive market. and vying for our customers are other satellite companies. usually one of those can bandal its offerings with broad band. we have to keep our customers satisfied with the quality of our service and value of what we're giving them. unfortunately, dish can not alone address two of the biggest complaints we face, the high price of programming and two the inability for our customers to select which channels they receive. the content industry needs to be part of that conversation. the main source of rates is the
sky rocketing rates of acquiring content. programmers have inflicted huge price increases leading to scores of channel blackouts when they withhold their signals. dish and other paid tv companies have called on congress and the fcc to update the out dated laws that govern how tv distributors negotiate for content with broadcasters. reform would go a long way in stopping blackouts, addressing the anti-consumer effects of forced channel bundling. i will end with this, dish is proud and we're committed to continued improvement. we are not perfect. we make mistakes. but we do our best to fix the mistakes that happen, and learn from them. we welcome the advice of the subcommittee so the experience
can be made better for our subscribers, thank you and i look forward to your questions. >> thank you. appreciate it. we're going to have the opportunity ask questions from we have seven minute initial round questions and we'll do five minutes for second round. we have a number of members here, i'm going to keep my questions shorter than that because i'll be here till the end. and let me start if i could, by saying i really appreciate the testimony. we learned a lot, including on issues we may be following up in terms of competition and insuring people have choices. but let me zero in on this issue of not providing refunds to customers. i appreciate your being here. i know you're here in your capacity as a private sector individual here, not with a company, but as a private citizen, and yet you were in charge in this time period we looked into, which was before
warner cable merged with charter and even going forward, some of the time warner practices that don't provide customers get a full refund for charges they shouldn't have incurred, particularly with regard to equipment. so i guess my question to you would be, when you look at the data, 40,000 ohio customers in 2015 were charged $430,000 they shouldn't have been charged. they're getting no refund for that. even the first five months of this year, 11,000 customers are being overbilled over $100,000. mistakes happen. we talked about that. and i mentioned, you know, the checkout counter at the grocery store, example that where sometimes they make a mistake then they correct it. and they don't say we're going to charge you less next time you come in. they say we're going to make you good. so it seems to me that the company could have looked into the overcharges and the companies represented here have and determined how long the customer had been billed for
these charge and provide them a refund for that. do you agree with that? >> i think i agree with that. but i would -- if given the opportunity i'd like to give a quick overview of the situation that we're discussing and how we handle credits and refunds. >> if you would. >> i'd like to bring up something that did not come up i think when we started which is we're undercharging customers significantly more than we're overcharging them. that's what we found and submitted as part of our revenue insurance program. i think that's noteworthy in the context of this discussion. secondly, as a company, we provide over $150 million in credits a year to customers. and lot of those credits are done in realtime and many are done when we know the origination of the actual air date and when we can quantify the customers impacted we do provide notice and we do
provide the xablth amount of what the actual credit is going to be. several years ago we built out a revenue assurance program and it was -- as you may have mentioned, it was designed to find these kind of issues. and over time, we found these issues and what the revenue assurance program found, as it looks to tie out whether our equipment is being charged properly on these accounts. of the 37 million pieces of equipment we have active, a very small fraction were being improperly billed. and on top of that, if you bring it down to the customer level, it was about .07% of customers with video equipment, had an issue and .03% of our modem. what i said earlier about winning on service, we take it seriously. and it doesn't matter if it's 10,000 out of 2.5 million customers that's what we've got to get right.
>> let me interrupt you for a second. we're talking about 40,000 customers in ohio alone in 2015 who were overcharged. you're talking about many more in other states represented around this panel. it's easy to say we undercharge some people and overcharge others. it evens out. not for the family that is overcharged. you shouldn't undercharge, either. i'm not suggesting, you know, that there is, you know, any benefit to undercharging or overcharging. what i'm suggesting is if you're overcharged and find out about it you ought to make them good. that's what other businesses do. i use the example the checkout counter, but it's true in other businesses you and i deal with. my question to you is simple. shoopt you have, having identified those people, simply provided them, and still you're not doing it because what you're saying is you're going to give
them a month credit where it could be years of having equipment that they were overcharged for. isn't that accurate? >> not accurate to say they be been overcharged for years. >> how do you know that? >> if i could take time to explain, we're looking for mismatches of pieces of equipment. what we're trying to figure out is if the service charge ties to the actual equipment. because of the amount of equipment we're turning over, whether we're upgrading our modems, or going all digital and have been launching dtas, there's a lot of transactional volume. and what i'm told and what i have learned is that it is a mismatch is being driven when a customer is during this transition window of putting equipment on account and taken off the account and matching that up to the actual service charge. what wrer we're doing every month, running a report to find
those discrepancies, and that's why i say based on what i heard from our team, is that i would venture to say that the majorityf those are more recent and within the actual 30-45 day span. >> okay. you don't know it hasn't been years, you're now doing this analysis, which is a step forward. as i said. and i think this hearing has created improvements in customer service for you and charter and based on what others have said it sounds like you have looked at your processes and come up with new suggestions, so that's positive. still, you're not providing people the money they're owed, even though you know they're deserved -- they deserve a refund. we'll get back into this with more specificity. i want to move to ms. mayo with my next round of questions. she is now at charter and charter is going to be responsible going forward for what time warner's and charter's customer service procedures are. i would hope that even though you have made an announcement
today you're going to provide customers some relief, that you just simply do what you have the data to be able to do, which is to tell the people i represent and i represent people on this panel, look, if you get overcharged, you get a refund for it, as you would in other businesses. i'll turn it over to senator mccaskill. i'm cutting my time short. >> he's saying that because he's trying to send me a signal that i can't go over. he knows me really well. he knows i'll get carried away. it appears to me from a distance that the business model that has grown up in pay tv is figure out a way to make the entry price as low as possible and roll people off the entry price as quickly as you can, and then deal with their anger once they realize the price has gone up, and by the way, if they call to cancel, make you train your customer service people really well in how to deal with somebody who is angry, and the angrier they get, the more likely they are to get
something from you, or depending on who they get, how skilled the retention agent is at holding on to them and handing them goodies, sometimes temporarily, to calm them down and hope you can hold on to them longer. there is so many things about this business model that is asking for customers to be upset. do any of you in your advertisements put the same size pricing on what they're going to pay after the promotion as you do for the promotional price? do any of you do that? all of you do the promotional price and then there's fine print. many of you don't even put what the price is going to be after the promotional price, correct? is that correct? yes? any disagree with that? the promotional price and transparency is the beginning of the journey that america has with their pay tv providers. let me ask about hd and other fees. does dish currently charge customers an hd fee? >> for mow customers we no
longer charge. >> you don't charge fees for new customers, what about old customers? >> we have a small number of customers who when they came in to dish, they had sort of a different pricing arrangement. so customers today we include hd fees in the receiver fees they're paying for hopper equipment. it's included there. for the subset of customers in earlier days of hd we did not have that fee included in the receiver fees, they're having lower receiver fee and then paying that hd fee as an offset. >> i guess what i'm saying you dish no longer charges new customers hd, but you charge old customers ad, correct? >> we're charging both they're kind of -- >> isn't it true if someone calls in and ask to have their hd fee waive they get it waived? >> if they call in, yes, we'll waive it. >> okay. once again, hide the ball. if i'm smart enough to know to
call dish, and ask for it to come off you're going to take it off? aren't you? >> agents will do it for long term customers. these are long-term customers for us. >> so how long do you have to be a customer before you have the magic knock to get the fee taken off? >> i don't know that there's a specific we have there. >> specifics are what i'm talking about. nobody knows how to get the best price from you guys. nobody knows. there's a secret sauce somewhere. i think it has to do with being really mad which is bizarre to me. let's go on to mr. patel. you all charge now an advance receiver service fee, right? >> that's correct. >> you took the hd thing off the bill and put a brand-new thing on the bill. how many of your customers do you think have any idea what the advanced receiver service fee is for? >> our intention was to really simplify the sales process and what we tried to do is simplify
the number of decisions a customer had to make. we got down to three, pick your programming package, and the level of programming you pick dictates how much you pay for the programming package. the second choice is do you want basic services or advanced services. basic services provides a good hd experience, but doesn't include dvr and on demand and other things. that's what that fee is it provides advanced services, it's $7 per room. as part of the customer experience effort, we found the number of choices customers had to make was extremely -- >> you wanted to lower the number of choices they make. isn't it true that not all customers are charged the same in your company? >> that's correct. >> how do i know whether i get a lower fee? if i call and ask will you lower my fee? >> no. it's -- it's kind of an apples and oranges comparison. let me explain why. >> quickly, if you would.
>> i will. when the fee was originally introduced, it was at a slightly higher price, and we have lowered it. >> did you lower it for everybody? >> the customers who came with the higher price receives their first room's equipment for free. so there's other components of their offer that were different, and so we have -- the challenge is it's a very competitive marketplace and the offers from a marketing perspective change quickly. >> i understand that. customers understand that. it's like shifting sand. let me talk about the secret rates offered by retention agents. in this investigation, we determined there are actually rates that retention agents are authorized to give their customers that are never advertised. does anybody disagree with that statement? so that's what's really frustrating. let me talk specifically about time warner.
to handle customers that want to lower the cost of the service, time warner provides agents with a chart that showed them how much to lower the price of the package each time the customer objected. the people actually had a script. now, if they get mad the first time, you can go down this much. if they get mad again, you can go down this much. and then we found out when we interviewed you that if they ask, they would tell the price they just offered was the lowest price available at that time, even though there was a lower price on the chart. they could still offer. and when we ask you about that you said well at that moment, that was the lowest price that agent could offer. that's the kind of stuff that's driving people through the wall. is it fair for customers to not be able to determine when they have reached the lowest price? how does a customer know when they've gotten the best deal? you can listen to my call, i kept getting mad and i got $120
back and got rid of the $7.99. i never would have known to do that if we hadn't done this investigation. will you all make a commitment today to advertise the lowest price available? any of you? will you publish it on your website? the lowest price available for your services, any of you? i have more questions the next round. >> thank you. senator paul. >> one thing that's interesting about pricing is that if you go to a car dealer and say what's the lowest price you'll give me on their car nobody is going to publish that. the question is is there competition or not. looks like there's a lot of choices you can choose and various ways of presenting themselves to try to entice you. that's the marketplace, buyer beware, if you don't like one of the choices you don't like their service you simply in america choose another server. i think though, that we need to
put this particular problem or this particular hearing in sort of a context, the context of what kind of problems we have in our country. we have a $19 trillion debt, anemic economy that's growing at a point and a half. millions of people aren't getting jobs. we're not growing at a historic rate. we have a $7 trillion short fall in social security. and a $35 trillion shortfall in medicare. i don't think congress is having hearings on any of these. i propose we ought to have a full permanent hearing on social security that meets all the time to address social security. i've been here six years and there's not been one bill to the floor of the senate to address the entitlement problem that we all acknowledge is there. we do have important problems we do need to face as a country. we're asked today to look at though the tactics of television providers to see if they're unfair, the bills are too complex. we are pointing to low customer
satisfaction surveys. one thing is very clear, television providers, customer satisfaction still exceeds that of congress. i'm not sure if there's enough wisdom in congress we can impart to people who have a higher approval rating than we do. if we're to examine the organizations that fail the transparency test, we might want to start with government. the pentagon has never been audited. it is enormous, a behemoth, and certainly we should audit it. they told us they're too big to be audited. we say, oh, well. that's been going on for over a decade. federal reserve completely unaudited. we can't get an audit through. we had little cooperation from people in the senate who say yes, we need transparency in government. this is an important problem and frustrating. i've been on the phone with people, in our household we get frustrated calling consumer reps, at the same time we've got
big problems as a country. we've got to figure out what wee going to do with the fed, the pentagon. the consumer financial protection bureau. and really, congress. congress uses bills that are hundreds if not thousands of pages long, filled with wonky technical jargon that is unapproachable to the average reader. congress uses high-pressure situations to get people to accept bills they don't like. a few members actually read the bills before they agree to them. and you know, so i think maybe congress might be one of our first items. unfortunately, you know, when you look at your government you're unhappy with your government you can't change your legislative provider. a lot of people probably would if they could. when it comes to television or cable or satellite, you have a choice. the satellite and cable industry in my state is a $4.7 billion impact on kentucky. i think in the midst of unhappiness about things not being perfect, and nothing is
ever perfect, we realize you have a choice, but we shouldn't lose sight of the fact of what the telephone industry does for our states as far as jobs and occupations and money for each of our states. maybe we should be asking how can we help them grow their business. the only way to grow their business is by having better consumer service, maybe there's obstacles such as tax and regulations that add costs. to your bill, too. i know when i look at my phone bill, i see a lot of government stuff on there. so maybe there are ways we could make the bills less by actually removing government obstacles. the fact is the market for television content has evolved quite rapidly through its own technological advancement and expanding consumer choices. milton friedman west argued the essence of the effect of television industry and telephone industry and computer industry or mail delivery industry, you name it, is competition. if there's an argument there is not competition these can be serious problems. as long as there's competition
and appears to be vibrant competition, you a choice. i have two satellite companies, i have two satellite companies, i can stream things. i have to have my son help me with that, but i can stream things as well. there's competition. there's more subscriptions you can get without a contract because it's becoming very competitive. one big cable company was bankrupt, apparently they're not a huge amount -- they're struggling to make enough profit. anyway, i think it's come to the point we have simpler billing as a marketing tool, some of the different companies are marketing they have simpler bills to get business away from their competitors. who may not be doing as good a job. i don't know. i think we need to put the hearing in perspective and not get too carried away. i have the same frustrations, everybody does in the modern world of trying to call and get through to these companies. we have to realize first do no harm. do we want to get involved with an industry and do it to such extent that ultimately we screw up something that's actually working very well in many
instances and acknowledge we have hundreds of choices in channels, maybe the house is not on fire, maybe things can get better through competition. i for one want to make sure we don't go too far in one direction. thank you. >> thank you mr. paul. as i said, competition is something we're looking into. in my home state of ohio, we don't have the kind of competition i would like to see. i've got numbers here. indicating how there is a lack of competition now. but on the other hand, we heard from some of you about how competitive forces have been helpful. and some of you raised things that could be done in terms of providing a more level playing field. there is more real competition and i agree with you. that's how you get better service. senator lankford. >> thank you, mr. chairman. thanks for hosting this hearing
and the conversation here. as senator paul mentioned there's a context to this as i read through the notes, one of my first thoughts on the section on not getting an answer the first time you make a call in customer service, i wondered how many times that our constituent service folks in our staff have tried to call va or social security or multiple other agencies and we'll work for months to get an answer to a question that should be a straightforward issue. there's a great deal within government that lacks in customer service as well. i think that deserves a public acknowledgment. that all of us have a very long way to go in dealing with cable customer service is the pot calling the kettle black as we work through this process. saying all that, i have also had people call my office that have been incredibly frustrated by not getting attention with their
cable provider. and they reached a point where they called their cable provider so many times and got non-answers that they eventually called their senator who we called someone that we knew and they eventually got attention. and it was the oddest thing for me to think why does it take literally an act of someone in congress to try to get attention on someone who has a billing problem, especially for senior adults that call our office. in the training and one of the issues i have is in the training. i understand there's a lot of selling and there's a lot of work towards profit. saying that, the people that are on the phone want to actually sell you a program is not shocking to me. it's akin to saying i'm shocked there's gambling in casablanca that people are trying to stay in business and sell a product. i do have a concern when we deal with people that are senior adults that do not understand the billing.
so the request i have whatever customer service upgrades you've made and all of you have made comments about increased training and capabilities, make sure you're paying attention to the fact that senior adults that are calling that have no idea about this billing practice and no idea of all these packages and they're being taken advantage of. that is something intolerable in this process. let me ask you a couple things, though, in the billing as it comes out itself. somebody give me a guess in the typical customer paying for cable services what percentage of that is state, local and federal taxes that they're also paying when they pay that monthly bill? can somebody give me a guess? i see lots of thinking. pen and paper is coming out.
>> i can say that at a minimum, we charge a franchise fee, which is around 5% at a minimum. and other tax and fees on top of that. the reason why it might be difficult to give you those exact numbers it varies by state sometimes. >> right. >> so on an average $100 bill i think 5% is a minimum number and you could work off of that number depending on the market for fees and things like that. >> anybody have a different number besides 5%? >> i would guess as least 10%. >> at least 10% of state, local and federal taxes, some sort of fee attached to it? i want to talk about an ongoing challenge that we have with packaging and then i want to get to streaming. we're going to have a conversation about the streaming services. i know you're also experimenting with it a great deal right now. the cost of the actual content
that's coming to you. there's an ongoing conversation about that. what i hear from cable providers is do you have any idea it costs for xyz content coming in. where does that fit into the typical billing practice? as you're trying to forecast let's say five years from now, when you talk about hardware, when you talk about fiber being put in the ground, and you talk about content. where does that rank? when you do your own analysis and looking at the threats, where does content fit into that? >> i'll take that, senator. the content costs rising is a significant issue. i don't think consumers truly understand the dynamic that's in place. we talked a lot about pricing, billing and fees. but, you know, for us, eight out of the last 11 years, the cost of the content has actually exceeding the pricing that we have passed on to the consumer.
and so we're in a difficult position, you know, it's a very challenging thing to do to pass on pricing to a consumer. no matter how you notify it, you know, it's going to be something that causes a negative reaction from customers. and from 2005 to 2015, content costs grew 195%. and to put that into perspective, it's growing at three times the rate of any other goods or services. and so i think it is an issue. i think it's exacerbated by the fact that the agreements require you to carry a lot of channels that consumers don't have demand for. and both of those things i think create pressure and create a structure that's not in the best interest of the consumer. >> going back to senator paul's conversation and senator portman, and senator mccaskill have all raised this issue about competition. the ongoing conversation in the
country right now is about just streaming content. rather than actually buying from cable or buying from or satellite providers. y'all are doing both. we're streaming content as a separate service with sling, is that correct? and through satellite. tell me about modeling for that and work through providing competition in that area for another completely different delivery advice. the key thing for me, can people get content they choose to get in the medium they choose to get it in. if they're ticked off about the latest $3 to $6 fee per room that they have to pay for, they have some other option to go to. >> the sling is our over the top product we have for streaming. it's more modular in terms of what we can do to provide content. we have a bit more bundling with our traditional product, sling is a bit more moglrl in that
customers have more choice in terms of having a basic package that's really affordable and then adding, you know, slimmer packages to it. it gives them more choice along those lines and so does that answer your question? >> it starts that. this is a longer conversation we can have that we don't have time for right now. i have to tell you, i along with every other american gets incredibly frustrated. senator mccaskill did a good job of outlining a basic call on customer care. all of us get ticked off, but i'm especially concerned about senior adults in my state. and the potential for them to be taken advantage of in this process based on the complication, but also the difficulty they've had even seniors who have called me saying i can't even disconnect my service or get an answer and they just want to say no but they're so incredibly kind and nice they can't seem to turn things off. and so that has to be addressed
in the days ahead and should be addressed in a way that actually honors the people who have been a part of that service and paying customers all along, so thank you. >> senator baldwin. >> thank you. i wanted to start based on senator lankford's last comment. we hear from constituents with enormous frustrations, but almost all of us, i assume, have had our own frustrating experience. we're not strangers to this. i'm actually curious about your own experiences with your own companies. and i wonder if you get paid tv from the company you're with now or formerly were with? let's go across and let me know. >> yes, senator, i do. >> john? >> yes. >> sorry. that was way too informal.
>> senator, i subscribe to comcast service. >> okay. >> yes, i do. >> i'm a dish customer. >> okay. do you call the same service number that any of us or our constituents would to initiate the service or to deal with problems or as current or former team members, do you have an inside number, a colleague or somebody who takes care of that for you? why don't you go ahead? >> yes, senator, i have it as a normal paying customer. myself and my team will also do calls into the system as well as normal customers. >> i was impressed with your testimony you engaging in the different aspects of the business and sort of trying to figure out what the customer experiences. if you had an outage, you would
go through the 800 number, or would you have an inside way of fixing it? >> i could go through the 800 number. i also use my account app, so i do some things online as well, to see the outage, when it would be cleared. would experience calling in as a customer. i take calls from customers directly, too. >> what about you? >> all of our employees time warner cable if they're in our footprint have time warner or used to have time warner. in terms of service, if the individual account level, mine or my family or any relative that asks for help i would go through the normal channels. if there is an outage that is, you know, state-wide or something happens on large scale and impacts me i would make sure that we're on top of it. but not really out of a self-serving purpose. >> how about you, ms. mayo? >> i'm sorry senator i'm abnormal.
i don't live on footprint for charter service. i actually subscribe to two different operators, comcast and cable vision. i use their services, i call their lines. i get support just like any other customer. >> mr. patel? >> i, as well, have directv service. and you know, generally, we'll use the egg00 number, the same 800 number our customers use or online tools. and like tom, we also have access to being able to listen to calls and so we'll do that frequently to get a pulse of how the customers are being serviced. >> so same if i have an issue i would call into our service as well. and i think a lot of us probably have the advantage of knowing if we have technical issues we know how to troubleshoot those things ourselves so there's probably a lot more self-service with the folks on the panel than other customers. >> back to the original point.
i hear continuously from wisconsin residents sharing their frustration with paid tv, satellite and cable. one consistent complaint i have heard over the years is that tv providers will not let customers purchase their converter box and instead customers are forced to rent it which costs them much more money over time. also, i want to share a story from one constituent which has already been -- the issues has already been references in our hearing thus far, but the constituents explained he was given a two-year monthly rate for tv and phone by at&t. but after a year, his bill increased by more than $80 without his consent. this additional $80 gave him no added service and in fact at that point three channels and music stations were removed. he said that at&t told him he
would have to pay for computer service in order to get his channels back. and ultimately hung up on him. my constituent explained similar billing issues with both time warner and dish. he ended his letter with this plea, and i quote, senator baldwin, i hear these complaints from everyone. what can you and the senate do to make all providers sign a contract so that they can be held to their words and finally remove all their false marketing? this is just a sample of what i hear from regularly. in light of senator mccaskill's earlier question about how big is the price for the promotion versus how are you adequately explaining or are you adequately explaining to the customer what's going to happen in this t two-year promotion where the price goes up after the first year.
in light of the concerns we hear over and over again, i'd like to hear from the entire panel, what more are you doing to insure that your companies aren't promoting misleading pricing information and what are you doing to grapple with these pervasive billing issues? why don't we go across the panel once again? >> senator, it is very important to make sure the customers understand exactly what they're getting. we do offer a wide array of products and pricing. and so we have done additional things from a disclosure perspective. to help with that. first, whether you order service online or with one of our employees, they are required to go through a full summary at the end of that interaction detailing all of your monthly recurring and non-recurring charges. we also follow that up with an e-mail, that we send to the customer at their preferred e-mail address detailing the
order and what's next as well. for example, things like the technician coming to their house. we also deliver a video that's a personalized tutorial for any changes they make to their package or for a new customer and we back it up with a 30 day money back guarantee as well. >> thank you. >> yeah, i'll try not to be redundant with anything that tom mentioned. but what i would say is i think the most important thing is what the customer actually sees on the bill. and making sure that what we are charging for is clear. and i would say one of the more recent things we did was try to show the promotional discount in relation to the full rate. if the full rate was $129 there would be a minus sign and then clearly what the discount amount was, let's say $40 or $20 and then a summary price of what the
actual bill is. the customer in any given month would be notified there is a higher rate and this is a promotion of x dollars. when we come up to that window at that time, 12 months or whatever the expiration of that window is for that core service, they would see that actual discount go away. or if it was a two-year role, they would see it get reduced. >> ms. mayo. >> that's a good point. and that was part of changes that have been made recently in an effort to be more transparent about billing to show the full charge and the discount the customer is getting. i agree with john, also, with tom, we -- if you're dealing with a customer service rep, on the phone, a sales rep, and place your order they will recap what you should see on your bill and exactly any charges you would be on your bill the first time. we send an e-mail confirming the bill and the appointment. we're working on improving that with more information.
but we have the core infrastructure set up. if you go into our charter store you get confirmation of what your order is. if you have a direct sales rep, you get confirmation of what your order is. on our website, you get an e-mail. that, too, we're improving the content associated with the confirmation from the website. >> mr. patel? >> so we tried to disclose it terms at multiple touch points on the initial call we implement a tool that essentially tells the customer and the agent what the required call components are relative to what the customer ordered. what we found is historically, all the generic terms were disclosed and the customers were losing kind of attention. so communicating the fewer things that were more relevant to the customer was important. number two, we record all of our sales calls in our direct sales call centers. if a customer says i was told something else we make it a
point to pull back that record and hold agents accountable. agents are given two opportunities to not make a mistake when it comes to the terms and agreements with that offer. if they do that twice, the consequence is they would lose their job. we try to hold the agents accountable, we have disclosures online, including a place where we spell out over the course of two years how your prices change. we send an e-mail confirmation, we have a written customer agreement. the last thing, probably the most prominent is on the bill we made changes so that from the initial bill you know exactly what the full price of the product is. what the discount amount is and we even show you that you're in month one of 12 of that discount. it changes every month. it's constant awareness for consumers i've got two more months left for this discount. when the bill does in fact change we spell it out for customers on the front page.
we've tried to do as much as we can to disclose this to customers and also drive accountability and controls in the organization if and when mistakes are made. >> so i think dish might be a little bit different in that we have an option for a two year price lock. so customers have a two year commitment to us and we can align pricing and do a price lock for them during the entire term of their contract with us. initial contract. but in addition to that, so if they stay with us beyond that two year price lock, they'll likely experience you know, price changes to whatever the then kind of current pricing is. and so we follow form to similar to what other panelists talked about with respect to during the sales call, we do all of the disclosures, customers get an
e-mail that outlines all of the things they need to understand, including pricing terms with their new service. we do something with our new customers where we do either if they call in before ten days or -- either they contact us within ten days if they don't we'll out bound them and walk them through the things they need to know as a new customer with dish, including anything with pricing, installation, other things. we never want anybody to be surprised by anything that happens on their bill. we also do kind of the bill statement messages and things looj those lines that other panelists talked about. we really do try to make an effort to make sure people understand the terms of their new agreement with us so that they don't have any surprises. >> thank you. >> i'd like to get back to some of the questions we were talking about earlier.
that has to do with people getting overcharged and companies knowing they're getting overcharged and not getting refunds. i have a copy of a bill here, it happens to be from ohio. a bill that has over a dozen line items in it. one of the responses we've gotten from companies is people ought to look at their bills. if you're being overcharged you ought to be able to find that. i think it's very difficult to discover you're being overcharged. you don't know what the equipment is, you don't know what the correlation is. between the charge and the equipment. second, look at one of these bills. it's pretty darn complicated. part of what i guess i would ask you, and i would appreciate your answer earlier that you thought that time warner could have done better in terms of allowing say these 40,000 ohians in 2015 were overcharged could have done a better job at dealing with that.
you have come up today as i understand with a new policy proposal that charter, being the new company, is i guess going to implement there would be a one month credit regardless of how far back it goes. we talked earlier about how far back it went. one question i would have for you and to ms. mayo as well, is why not at least notify the customers, say, hey, look, we overbilled you. you have overcharged you. look at your bill. tell us, you know, how long that's been. if you can't find out for them. at least give them the information and notification to be able to find it themselves. have you thought about that, implementing that kind of notice procedure? >> yes, as i mentioned earlier. i think we do as i said when we define the number of customers impacted. it's not a dynamic number or constantly changing. like the equipment example we discussed earlier, we provide
notice that we overcharged and for how much. the example relating to equipment, because of the transactional nature and volume of equipment that's moving in and out is harder to determine. in our billing system and the way we run it to figure out the exact origin date of when those customers were impacted. to your core question, as to should we notify or not, i think that's a natural progression of any revenue assurance program. i think in hindsight we should notify customers if they're being overcharged. going forward i would kick that to kip because ultimately i think it falls in her decision making. >> what you said is significant. you think customers should be notified with regard to the equipment, particularly which you say is more complicated. i know you're no longer in a position to implement that. ms. mayo, you are. so we have kicked it to you. and maybe two questions for you. one is, do you agree that one of the things you ought to be doing
now is notifying the customers so they know they have been overcharged. again, 40,000 customers last year, just in ohio. you know, and this is an issue that i know you're attempting to address today with your own proposal. yours today as i understand it you'll give a one year credit to customers that have been over charged. for time warner legacy customers, i understand it's one month. my second question to you is, now that you're in charge of both, the time warner legacy customers as well as your traditional charter customers, why wouldn't you have the same policy? why would it be a month for one and a year for the other? of course the policy i'd like to see is going back and giving them their full refund which, again, is what other companies have managed to do. you have this ability as i understand it through your new audit program to be able to understand what happened. if you could talk about the discrepancy and what the possibility would be of providing a real refund and talk
about if you could the notion of notification. >> sure. so i want to be very clear that producing an accurate bill is our responsibility. it's not the customer's responsibility to find a mistake. it's our responsibility to produce an accurate bill. and at charter, as i said my opening statements, even though we had a 99.4% accuracy rate which seems high, it's not high enough. we do believe that 100% accuracy is the only acceptable solution. so through this discovery we were able to put in place a daily reconciliation we're running every day and looking at every customer's account and looking at the charges on the account and the number of boxes. if on any given day if the box charges exceeds the boxes we'll remove the excess charge. this will assure 100% accuracy. we're going to implement the exact same thing at time warner cable. as you know we closed on time warner cable about five weeks ago.
i'm still getting my arms around it, still trying to understand the billing systems and how they work because we all operate our billing systems differently. we all operate differently. the programmers are already working on the design of that reporting. it's a little bit more complicated for time warner cable because of the way they package their services and some packages include a free set top box. it's like it's not a billing error there. it's embedded in the service price. we've identified 11 exceptions that have to be configured into the reporting. i'm going to need about 60 days to get it in motion. but we will do that. then we'll have 100% accuracy not just with charter and time warner cable, but brighthouse as well. relative to note fxz of customers, i agree with you. i think we should notify customers. no question about it, and as you mentioned, we'll be notifying our customers and giving them a 12-month credit for any of those customers have been overcharged
through our reconciliation. >> you talk about 100% accuracy, quickly with regard to your legacy customers coming in. my understanding is time warner with regard to its correction of billing errors, aims for 80%. has in the past. understanding they're now part of your organization, is that accurate? >> i'd like to address that. i don't think the aim is 80%. i think the aim is to try to get to 100%. in the billing system that we have or we use in ohio, the fix we put on that account has -- does not necessarily correctly impact customers that are in pending status. what that would mean is they have ordered service but they haven't been installed yet. one of the reasons we have that breakage is that when we apply that fix, it is not sticking on customers that have yet to be formally installed. again, in terms of process improvement, there's an opportunity to do that, but i don't think it's that we're
aiming for 80%. that's what we're getting based on the way our system is set up in the last several months. >> you are only able to correct 80% based on your system, we've also learned time warner cable uses computer software that routinely has failed, is it true in some months it's been so difficult to fix the error time warner cable simply doesn't correct any bills for that month? >> if we're talking about the equipment charge, what i can say based on my familiarity with this if there was a 20% breakage you referenced earlier where the macro did not take effect, it next time we run the report again, it would indeed capture that breakage and try to fix it. that fix would happen the next month. >> from our investigation, i learned that in may of this year, 2016, you didn't make corrections for that month because of the computer software issues. and you're saying you will go back and later fix that in this month?
>> i want to be clear i'm talking about the process. the following months, if it doesn't fix that we'll rerun the same fix and i would have to verify for you the very specific customers you're referring fall into that bucket to make sure i'm being accurate. >> again, my concern is what charter is going to do going forward and making sure the customers are notified and made whole. i appreciate, again, that we have made improvements based on today's announcements you've made in the context of this investigation you're going to provide some credits. but i hope going forward you'll also provide that information to the customers so they can understand what the issue is and make them whole. senator mccaskill. >> thank you, mr. chairman. i'm disappointed that senator paul left. i want to welcome him to oversight. i've spent hundreds of hours in this committee room doing
oversight of government. of every part of government. i welcome him to the oversight of our military contract acquisition process. i have spent hours and hours and hours in many many hearings not only on acquisition there and oversight there, but policy and procedures throughout our government. so i'm an oversight kid. and i think if we're going to stop doing oversight because we're unpopular we might as well put a sign on the door that says gone fishing. i can't think of anything we'd be doing oversight on that is, you know, not more popular than us. we're the least popular right now. but that doesn't change our obligation to address things our constituents care about. and i think you guys know constituents really care about their tv. and they care about how they're treated and so i'm not about to apologize for caring about
oversight in this area. because it's what i heard from the people i represent. and i am all in on oversight of government, believe me when somebody calls with a va complaint or social security complaint or a cable tv complaint, i'm on it. i'm not going to apologize for it. i hope to see more of senator paul here. frankly, most of these hearings we don't have very many people sitting out there. it's dry stuff. it's in the weeds. i welcome his attendance as many of those hearings in the future. i want to talk about the fees and taxes. i've got a couple of charter bills in front of me. one more recent than the other. and i want to make sure i put this in the record, ms. mayo, because one bill, the total for tv services for charter cable services is $158.98. there's a sales tax of $1.25.
and there's franchise fee of $8.69. and then there's an administration fee of $0.09. i've added those up and that is $10.03 on a bill of $158.98. another bill i'm looking at, the bill was $54.99 for tv. $39.98 for internet. and the taxes, fee and charges were $2.28. but there is one item under taxes, fees and charges i want to spend some time on now. and that is the broadcast tv surcharge of $5. that's the biggest item under taxes, fees, and charges. now, if i get this bill and i'm
somebody who is not really educated, i'm going i cannot believe the government is charging me $5 extra for broadcast tv surcharge because it's right there with taxes. and then fast forward and just a few years ago what was introduced is now not only are we getting broadcast tv charges but now we're getting rsn charges. what i want to make sure i understand here is that this has been a decision, i believe by all of you, raise your hands if you didn't, that you would take -- okay, dish did not. you did not put any rsn or broadcast surcharge fees in. okay, so dish decided not to do this, but the rest of you decided that you were going to take something that was in the basic programming fee for buying your service and you were going to put it in another place on the bill and call it something else. and i would ask you why -- can
you tell me why all of you decided -- isn't it true all of these were previously in your video charges? >> yes. >> yes. >> ms. mayo? >> yes. >> mr. patel? >> yes. >> all of these were in your video charges and then i believe -- i don't know, two years ago, you began to decide we'll put those down there with the tax and surcharges. and some of them started out for a regional sports network, $1.39 a month and they're up to as high as $5, $6 a month. did you inform your customers you were taking something out of what they were normally paying for in their video package and giving it a special line item, and could somebody give me a good excuse as to why that happened and what's going to keep that from being the future billing model? >> i'd like to explain our
process. we're a nationally priced product. because we have a national service, broadcast channels are available nationally and we include those in our package. regional sports, however, varies significantly market to market. and essentially what's been happening is in the particular market, content company may decide to buy the content rights for a sporting team. and i'll use l.a. and the dodgers as an example. they'll pay an outrageous amount for those rights, create a new channel, and effectively try to, you know, force carry that channel in a market. so for us, the choice on regional sports became in a market like new york where you have lots of teams and consumers in new york get access to all of those regional channels versus a market in st. louis where the costs are one third to one fourth of what the new york
costs are, where we didn't want to do is to essentially pass on all of the costs all consumers. so carving out rsns to us was a way to put where the product was available and how customers were benefitting. the rates, the deals haven't been struck and haven't escalated. that's included in our base packaging. in markets where rates are 4x what they were a few years ago, and there are significant charges we didn't want to levy those to customers who don't benefit from the programming. in all of our markets, the rsn fee is less than 50% of our underlying costs for our market. that was our decision process because we're a nationally priced product. we didn't do that for broadcast fees because broadcast channels are available nationally. >> don't they belong up above.
don't they belong with your part of the bill? aren't they, in fact, programming costs? they are not taxes. they are not something that -- this is something that's part of -- why are they being put in this category to give the consumer the impress that this is something the government is doing to them. >> i think in our bill, it was in other charges. that's a fair observation, and maybe that's something we will go through. >> why do the rest of you put this down with taxes? as opposed to putting it up with your programming costs? >> senator, so we did put the broadcast surcharge in the charges and fee section. we don't charge an rsn at charter. we did that not to try to make it a government issue fee or charge, but it's nondiscretionary. if we put it in the video section, the concern that the customer would be calling and saying i don't want that, i'd rather not have that.
>> hbo is in that section. they don't have to have that. >> they could remove the hbo section, the hbo product, but not the broadcast basic product. >> maybe you should create a whole category. nondiscretionary extra programming. then people would begin getting angry about the amount of money that's being thrown around in sports right now that's causing these prices to go so high, which is the subject of hopefully another look at what you all are going through in terms of shifting sands in terms of your programming costs. i get that's another component of this. what about for comcast? why does that fee go down in a section that makes customers think it's a tax? >> senator, we agree with you around the importance of the disclosure. we did notice our customers and do not include is in the area with taxes or any government mandated fees or surcharges. >> that's terrific.
>> i will just have one other question, and then i have a bunch for the record. question and then i have a bunch for the record. i know that you all in past, mr. karinshak, have reviewed complaint data to ensure the percentage of customers who state aid comcast representative quoted them the wrong price. in some cases this was as high as 30% for certain complaint types. did you take on an analysis to determine whether the customer was right in connection with that? >> senator, we do look at our complaints data and we saw the opportunity to improve our disclosures for some of the things i had referenced before around implement k the order summary at the end of every point of sale interaction, for being able to go through and send the e-mail. as well as the video bill and reinforcing the 30-day moneyback guarantee. that was one input that we
looked at in ultimately making those changes. >> no one has had a chance to address, does anybody want to address before i close, and i will have a bunch of questions for the record. does anybody want to address the praf charging someone to remove a product from your bill? mr. patel? >> i can answer that. >> that would be a good one for you to take. >> we don't charge for removal of any services other than warranty service and the reason that that's in place is essentially to prevent gaming. a lot of times a consumer requires free services or a free upgrade, which is part of our protection plan program. they can get an equipment upgrade every two years. what we were trying to prevent
is a consumer getting that benefit and the very next month removing the service. that's the only service through which -- >> that was a problem, someone would get an equipment upgrade and the next month quit? that makes no sense. why would you go through the trouble of dealing with you guys to get an equipment upgrade, get somebody out there to change your box or whatever and then quit the next month? that's not logical. >> no, no. the point is the equipment upgrades is you transition from standard service to hd or now hd to ultra hd, customers normally would have to pay for that equipment upgrade. and one of the points is in up to four rooms of your home you're able to get that equipment upgrade free every two years. the thing we were trying to solve is the very one you mentioned because before if an existing customer wanted an upgrade they had to call their provider, haggle, maybe threaten to leave and then maybe they would get that upgrade as a complimentary service. so we made this a part of our
program where every two years you can refresh your experience in up to four rooms. >> i'm just telling you, i -- >> and it -- >> i'm not aware of that. and you're one of my providers. and i've never heard that i get free upgrades every two years. it's -- i didn't get any of that information when i tried to change that. so i think there's a disconnect between what you believe is going on in the field and what is actually going on in the field. anybody else want to give me a reason why you charge someone to quit paying you something? >> senator, if i can? so we don't charge any kind of change of service fee for upgrades or downgrades at charter. and we do not charge any kind of early termination fee. so we know that we have to win our customers' business every single day because they could walk out the door any day. those are fees that we're not enamored with and do not use.
>> i think dish charges to get rid of the protection also. you guys charge? >> it's true. we have a $30 removal fee. it's a very similar situation to the one that was just described where if a customer -- so what we normally charge somebody for truck roll is $95. if a customer is on the protection plan, they pay a greatly reduced rate for that. so they'll pay $10. if you add the protection, you can add it the day you need it. so if you call us and you have an issue and you require a truck roll, you can add the protection plan. it's $8. and all that -- what we ask folks to do is keep it for six months. >> i see. that makes sense. i just wanted to say for the record that your regulatory -- your rsn fees are put in other charges and credits which include other charges like regulatory recovery fees.
so i'm not sure it's really clear that that is something you guys are charging for that. inside the box i recommend it. it's on the website. mccaskill.senate.gov. i recommend the committee joint report to all of -- anybody who buys pay tv. you'll learn a lot. and i want to thank all of you for cooperating in the investigation. i want to thank the chairman for his patience with me. he is very patient with me. we are good cop/bad cop. he's definitely the good cop. >> it's been very productive over the last year doing this investigation. i think we have seen here today some practices that you have specifically undertaken in which you're going to improve the customer experience and customer service. i don't think it goes far enough in terms of providing actual refunds to customers who have been overbilled. i understand some have been underbilled and some have been overbilled. but that doesn't help the family that's been overbilled. it's not fair.
with regard to your testimony generally it sounds like there's also some other customer service policy changes you all are considering based on this hearing and our investigation. and that's appreciated. on the rsn fee i would just say, this is for people who are not familiar with this, ths it's the regional sports network fee you are charging. you choose to put it on the bill separately. you could put cnn on the bill separately if you wanted to. but my concern about it is that it does appear in some bills, with some of the companies, in a place where it looks like it's a government fee. and i would again hold up this bill from ohio, which is, you know, the bill that i get and my wife jane and i get. and it says taxes, fees, and surcharges. it has franchise fees, state sales taxes, fcc regulatory fee, fcc regulatory fee voice, universal service fund, regulatory recovery fee, ohio trs -- and then it has broadcast tv and sports programming, which is where the rsn is. and i don't think that's the right place for it because then people view that that that's a
mandatory government fee like the other ones. so i would ask, ms. mayo, are you aware of that? and with regard to your legacy time warner customers, i understand you don't charge it separately, but with regard to your new customers you're now taking on, do you plan to keep this in the category of fees and other government charges or to have this in a more i think honest display where it's either by itself or with other fees? >> so i'm aware of it now. and yes, our intention is to overlay charter's business practices with time warner cable. and we don't charge an rsn fee. so hopefully that will be something that will be removed entirely from the bill. >> again, i appreciate the fact that we've been able to talk about some of these very specific issues that i hear from my constituents about and you hear from your customers about. i appreciate the fact everybody
has been very candid today in talking about this. let me also mention because senator mccaskill mentioned it with regard to the oversight responsibilities here, to the earlier comments made, the subcommittee has done significant oversight of exactly what senator paul was talking about. in other words, looking at government and looking at our economy, which is disappointingly weak. looking at government spending. specifically we have had a series of investigations and hearings on issues like tax reform. which goes directly to economic growth. we have had hearings on the affordable care act and a lot of the waste and taxpayer loss specifically as it relates to the co-ops. and we've done some great work on that. we have also looked into other issues like labor trafficking and hhs and how they allowed kids to get into the hands of traffickers. certainly government oversight there. next month we will be combatting looking at the ways to combat isis propaganda and again
looking at our government response to that for those who follow what we do, that will be something we'll be looking at next week. certainly a topical issue and one that everybody is concerned about is how do you stop this isis propaganda from taking more and more of our impressionable young people who feel alienated and radicalizing them. we're also going to look at this opioid abuse issue which is at epidemic levels. this is the heroin and prescription drug epidemic around the country and some specific issues we think this subcommittee can provide some additional insights on. we have done tough, significant, important oversight and will continue to. and again, i appreciate the witnesses coming here today and the fact that this process, not just the hearing today, but the investigation has improved some of your individual practices as it relates to the people that we represent. i want to thank senator mccaskill for her work on this issue over the years. this is not as you can tell her first time dealing with this issue. i'm not on the commerce committee, but she's done a lot of work on this issue and focusing on consumers there.
as we move forward, we're going to continue to look at the industry and look at this issue of consumer choice and competition. that's ultimately the answer is to give people a range of choices. we talked about there is competition but there's also some concerns about having more competition. i think innovation is going to be allowed to flourish and new products will come to market. and consumers are going to be better off when there is competition. so we'll be looking at some of those barriers to that. and we'll also be looking at other issues that might have come up today. i'll have some additional questions for the record. i appreciate the prompt responses you have given us to previous questions and specifically to the companies here today. i thank you for your willingness to cooperate with us in this investigation. again, what i think has been a positive hearing to have an honest hearing of some of the concerns on the consumer side. the hearing will remain open for 15 days for additional comments or questions by any of the
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on thursday the social security and medicare trustees board released its annual report on the financial condition of the government trust funds. two board members, treasury secretary jack lew and labor secretary thomas perez, discussed the report's findings in this 20-minute press briefing. >> good morning, everyone, and thank you for being here. the social security and medicare boards of trustees met earlier today to complete their annual financial review of these two important programs and aproved their finality reports. it's been a privilege fo t